Dissecting the Patient Protection and Affordable Care Act

Category: National

The Supreme Court is hearing challenges to the federal health care law, but few understand what’s really inside this controversial policy. 

It has been two years since President Obama signed the Patient Protection and Affordable Care Act into law, initiating a wave of controversy that has so far failed to ebb. This week the U.S. Supreme Court will spend several days hearing arguments for and against the constitutionality of the law. Despite having strong feelings about the law, few Americans have actually read the 906-page bill in its entirety. Political pundits of every ideological variation have exploited our confusion by selectively highlighting or concealing certain provisions of the law. We may be very familiar with the talking points, but the facts are somewhat harder to find.

The most contentious provision in the Act is the requirement for individuals to maintain “minimum essential health care coverage,” which is frequently referred to as the “individual mandate.” This provision will be the first to be taken up by the Supreme Court, as many believe that requiring individuals to purchase a product is unconstitutional. It is certainly true that the law requires everyone (with a few exceptions) to purchase health insurance, although the options for coverage vary. A person can maintain coverage through Medicare or Medicaid, if eligible, an employer-sponsored health plan, an individual market plan, or any other health plan that covers at least 60 percent of costs. Still, if you are uninsured, the requirement isn’t due to take effect until January 2014.

What happens to individuals who don’t purchase a health plan? The act establishes a penalty, which must be reported on income tax returns, on individuals who can afford health insurance but fail to purchase it for themselves. There are a number of complex calculations for assessing this fee, but for most individuals it will be an amount equal to one-twelfth of 0.5 percent of an individual’s income, beginning in 2014 (the percentage is gradually raised in 2015 and again in 2016 where it rests at one-twelfth of 2 percent).

Other well-publicized features of the law include the requirement that each state establish their own Health Insurance Exchange Program. Each exchange will be a competitive marketplace administered by either a non-profit organization or a government agency that will allow consumers to compare and purchase health insurance plans. Consumers aren’t required to purchase a plan from the exchange, but each state must establish the exchange itself. If a state fails to do so by 2014, the U.S. Department of Health and Human Services will step in and create one for the state.

At this point, you may be wondering: how does all of this affect me personally? Maybe you already have health insurance through your university, your employer, or your parents. Maybe you’re uninsured and apprehensive about what will happen to you.  In either case, take note: the health care law contains a number of provisions that have consequences for those of us in Generation Y. First and foremost, the age at which you are no longer covered by your parents’ health insurance plan has been raised to 26, provided that you remain unmarried. Secondly, those of us just starting out in our careers that have incomes between 100 percent and 400 percent of the federal poverty line can claim a discount of up to two-thirds of the cost of co-pays and deductibles. The act also prohibits insurers from refusing to cover individuals with preexisting medical conditions, and from basing eligibility for health insurance on a person’s medical history, genetic information, or claims history. In a similar vein, once you have coverage, your insurer cannot drop you from the plan for any reason unless there is evidence of fraud.

It’s important to note that there are certain things the health care law does not do. Among the most frequently discussed provisions is the exemption for undocumented immigrants and prisoners. Neither group is included in the definition of a “qualified individual” who is eligible to purchase a health plan through the exchange. Consequently, they will neither be included in the individual mandate nor be eligible to purchase a plan through the health insurance exchange. Certain other individuals are also exempt from the individual mandate. They include: people who have conflicts of religious conscience, members of health care sharing ministries, individuals for whom the cost of coverage would exceed 8 percent of their income, and people living below the federal poverty line. Individuals who have suffered a “hardship” may also be exempt from the penalty for failing to purchase insurance, depending on how that hardship is interpreted by the HHS Secretary.

In its final form, the law states that no health plan is required to cover abortion services, although a plan may choose to provide such coverage if desired. Each state is also authorized to enact laws prohibiting health insurance coverage of abortion.

If you’re concerned about what will happen to you if you ignore the penalty for failing to purchase insurance, don’t get too imaginative: taxpayers cannot be criminally prosecuted or have their property seized if they don’t pay the fine. Finally, the law states that no person will be required to end his or her coverage under any health insurance plan if the person was enrolled by the date the Act became law.

To learn more about the Patient Protection and Affordable Care Act and provisions that may affect you, read the full summary at Project Vote Smart or call 1-888-VOTE-SMART.

Tags: Gen Y, Health care, health insurance, Patient Protection and Affordable Care Act, Project Vote Smart, Supreme Court